Research archive for GOOG

Big M&A news coming out yesterday from one of our recommended stocks in New York. We had Google announcing a massive $12.5bn deal to buy Motorola's cellphone business. A deal that has picked up a lot of criticism. It is the biggest acquisition in Google's history and throws them into the extremely competitive world of smartphone and tablet hardware manufacture.

Google jumped nearly 13 percent on Friday, the share price that is. Year to date Google is flat, up a fraction really. Amazing. And 150 USD above their 52 week low, around 45 Dollars (less than 8 percent) below their 52 week low. Mean estimates are for somewhere in the region of 34 Dollars worth of earnings and in the next fiscal nearly 40 Dollars worth of earnings. So what do you pay for a company that has grown so quickly? That has proven that they can diversify (and quite quickly at that). Let me put it this way, I would rather be owning Google than some stretched valuation on a new listing of a relatively young business. Still, Google might seem expensive on 21 times earnings. But less so forward, 15 times 2012 earnings. No dividend. That US tax rate needs to be addressed by the law makers. But seemingly those same folks cant put their underpants on correctly.

Firstly we had Google smashing expectations with their Q2 earnings numbers. Net revenue was at $6.92bn (up 32% from last year) vs consensus of $6.75bn. The big question was profits however as investors were worried about the increasing costs that Google were incurring after making some big investments in staff and capital. EPS came in at $8.64 vs consensus of $7.68. Annualise that and we get $34.56 and a PE of 15 assuming no growth from this quarter (I'd say that is highly unlikely). Like I mentioned earlier the stock is trading up 12.6% after hours so we should be expecting an open in the region of $595. How the analysts were wrong.

One of my favourite companies in the whole wide world, Google, released results last night. Revenue for the first quarter was up 29% yoy (3% qoq) to USD6.5bn which was generally in line with estimates. EBITDA came in at USD3.6bn (wow those are great margins of 55.5%) but was slightly less than what highly expectant market participants were hoping for. This equated to USD8.33 dollars a share for the Quarter.

Newspaper advertising revenue. You would expect the trend to show that it is getting worse and not better, but Byron shows that it is a little more alarming than you think. Like we say in the office, this notion that newspapers are dead is nonsense, those fast enough are just changing their model.

Google were slammed last night, part the below story about Groupon and part a pending fine of sorts, Apple also had a bad time, perhaps the competition gathering momentum. BUT, the iPad version 2 is going to be released with wow features before some guys have even got version 1 to market. And Walt Mossberg, a well respected journalist at the WSJ who thinks these things through well, suggested that the only tablet he thought could compete with the iPad would be the Samsung Galaxy. So, sorry RIM. Phew, I guess for those types, RIM and HP and even Microsoft and all the androids, they would hope he is wrong.

Google "knows" where you are. And what you are up to. Is that such a bad thing? So what if they know about my web search activities? I have still yet to see a compelling Google advert that I must just click on NOW. The more search engines pick up and the more they are able to help me, I should be so happy, not so? Or have I got it completely wrong here, are Google going to sell my information to the Russian government who are going to send me to the Mongolian desert where there is zero market, news and zero sport coverage, because I do too much of that? Gimme a break. Your bank has all of your information, OK.

Afterhours was actually where the action was at. In the form of my favourite search engine, Google. I do also use Safari, but I associate almost all searches with Google, even if this is not the case. Third quarter profits when measured against last year surged 32 percent to 2.17 billion Dollars. Call it 6.72 a share worth of earnings, annualise that (matchbox on the fly valuations) and you get to around 27 bucks. 588 bucks pre market, up 47 Dollars a share post the close. That is nearly nine percent, yowsers. But that is an earnings multiple in of around 25 times earnings. Next year the expectations are for the company to earn in the region of 31.33 bucks a share. So even close to 600 bucks less than 20 times forward earnings.

A little pressure coming through on futures this morning and overnight as Google missed the "whisper number". Check out this article that I found while I was Googling. Google Misses Some Estimates as Costs Rise to Tap New Markets. Oh, and FYI, Facebook has more searches than Google. Down nearly five percent in after hours trade.